..................................................................................................................................................................................................................... .. .. ..' . .. ... ... .. .. .. 23/79 PORTUGAL AND THE EUROPEAN COMMUNITY This information note has been published on the occasion of the official opening by Mr Lorenzo Natali , Vice- President of the Commission of the European Communities, of the Commission Press and Information Office in Portugal on 29 September 1979. CONTENTS I. Introduction II. The 1972 free-trade ag reement between Portugal and the Community. 1. Provisions of the agreement 2. Emergency aid , additional and financial protocols 3. Emergencydisasteraid........................................,. 4. Revision of certain provisions of the agreement. III. Enlargementof the Community - General considerations and views IV. The first steps towards Portugal' s accession to the European Community 1. Requestformembership.....................................,... 2. The Commission s opinion .. 3. The Council of Ministers ' position 4. Development of negotiations Annexes:Statistics Free reproduction authorized , with or without indication of origin" Voucher copies would be appreciated. November 1979 NOTICE Subscribers to ' EU ROPE-IN FORMATION' are requested to note that this publication is distributed by the services of the Office for Official Publications in Luxembourg. Any change of address should be notified to: Mr MARASCHIN OFFICE FOR OFFICIAL PUBLICATIONS OF THE EUROPEAN COMMUNITIES Boite postale 1003 5, rue du Commerce L - LUXEMBOURG However, any requests for new subscriptions or additional information concerning this publication should be addressed to: COMMISSION OF THE EUROPEAN COMMUNITIES Spokesman s Group and Directorate-General for Information Publications Distribution Service Berlaymont 2/83 Rue de la Loi 200 B ~ 1049 BRUSSELS Tel. 735 0040 / ext. 5120 Or 4301 I. INTRODUCTION The development of relations between the European Community and Portugal, outlined in this note, can be divided up into two phases: Up to 1974 the Community s relations with Portugal were confined to the trade sector. These relations did, admittedly, take on a rnore concrete form with the conclusion in 1972 of a free-trade agreement, at the time that Denmark, Ireland and the United Kingdom joined the Community. This agreement followed the pattern of bilateral agreements concluded, in particular, with the other countries of the European Free- Trade Association (EFTA), of which Portugal is a Member State. The Community was very satisfied with the re-establishment of democracy in Portugal in 1974 and from this time onwards the two partners have come notably closer together in all fields. Portugal expressed its wish at that time to strengthen links with the Community over and above the free-trade agreement. It requested financial aid together with the revision of a number of provisions in the free-trade agreement. In October 1975 the Community granted Portugal special financial aid, then in 1976 an additional protocol and in 1978 a financial protocol were added to the agreement, giving Portugal more appreciable commercial and financial advantages. Portugal's formal request for membership, which was submitted to the Community in. 1977, opened up a hew stage in the process ~ that of integrating Portugal into the European Community as a full member. II. THE 1972 FREE-TRADE AGREEMENT BETWEEN PORTUGAL AND THE COMMUNITY Before Portugal submitted its request for membership relations between Portugal and the Community were based in the main on the free~trade agreement signed on 22 July 1972.2 This agreement entered into force on 1 January 1973. The agreement falls within the framework of the bilateral agreements signed with the European Free- Trade Association (EFTA) member countries which were not applying for accession at the time of the first enlargement of the Community that took place on 1 January 1973 with the accession of Denmark, Ireland and the United Kingdom. 1. Provisions of the agreement The general provisions and the object are , in principle, the same as for the other EFT A countries: progressive establishment of a free-trade area for industrial products between 1 January 1973 and 1 July 1977. The agreement differs from the other EFTA agreements, however, in the inclusion of a section covering agriculture. Furthermore, in so far as industrial products are concerned, the timetable for Portuguese tariff dismantling has been extended to 1980 or 1985 in order to give Portuguese industry a longer adaptation period, Like the other agreements signed with EFTA countries, the agreement with Portugal includes a ' future developments clause. Portugal attached great importance to this clause intended to provide possibilities for the development of the agreement. Portugal can submit a reasoned request to the Community, and vice versa, if the interests of the economies of the two partners call for the relations established by the agreement to be .extended to other fields. 1 Article 237 of the EEC Treaty: Any European State may apply to become a member of the Community. It shall address its application to the Council , which shall act unanimously after obtaining the opinion of the Commission. The conditions of admission and the adjustments to tbis Treaty necessitated thereby shall be the subject of an agreement between the Member States and the applicant State. This agreement shall be .submitted for ratification by all the Contracting States in accordance with their respective constitutional requirements ! OjL3010f31. 12. 1972. Provisions concerning the agricultural sector In view of the high proportion of agricultural products in Portuguese exports and the preferential system which this country had acquired with regard to the British and Danish markets within the framework of EFTA, the agreernent between the Cornmunity and Portugal provides for tariff preferences, especially for tornato concentrates, canned sardines and certain wines and fresh fruit and vegetables. Provisions concerning the industrial sector Duty-free entry for Portuguese imports of industrial products from the Community is to be achieved in either 1977 or 1980. However, in so far as a number of products are concerned, the timetable for the tariff reductions runs until 1 January 1985. The agreement also authorizes Portugal to introduce new import duties in order to facilitate the creation of new industries. Certain Portuguese exports to the Community are subject to ceilings, which will end in 1980. The timetable for EEC tariff dismantling is as follows: Tirnetable Rate of reduction of customs duties 1 April 1973 20% 1 January 1974 20% = 40% 1 January 1975 20%= 60% 1 January 1976 20% = 80% 1 July 1977 20% = 80% 20% = 100% = duty~free entry. 2. Emergency aid, additional and financial protocols From April 1974 onwards the Portuguese authorities worked towards strengthening links with the European Community. It was thus that, within the Joint Committee responsible for managing the free- trade agreement, the Portuguese delegates expressed the desire for the Community to rapidly supply Portugal's economy with the aid it required and this, in particular, by improving the trade arrangements laid down in the agreement. On 11 May 1975, considering that the Community has 'a natural interest in giving its fullest support to Portugal's efforts to strengthen democracy and promote social and economic progress' and that ' the support given by Europe to Portuguese democracy must be expressed in a spectacular manner , the European Commission proposed to the Member States that they should authorize the commencement of negotiations in order to strengthen the free-trade agreement signed in 1972. This strengthening of links took the following form: (a) Special emergency financial aid, decided on 7 October 1975. The European Investment Bank (EIB) made credits available to Portugal amounting to 150 million u.a. (5 300 million escudos), coupled with an interest subsidy of 3% (representing 30 million u.a. (more than 1 000 million escudos) which were included in the Community budget). This loan served to finance infrastructure., industrialization and agricultural projects during 1976 and 1977. (b) An additional protocol to the 1972 free-trade agreement and a financial protocol. The additional protocol contains a commercial section, a cooperation section and a labour section. In the commercial field the Community granted certain tariff concessions to favour Portuguese exports especially textiles, paper and wines. In addition , the Community brought forward to 1 July 1976 the date for final abolition of import duties on industrial products from Portugal , whilst Portugal was authorized to re-establish certain customs duties up to a maximum of 20% with a view to giving increased protection to its most vulnerable industries (customs duties will be finally abolished on 1 January 1985). Cooperation was established between the Community .and Portugal in the industrial , technical technological and financial fields, This will contribute towards the economic and social development of Portugal. In so far as labour is concerned. Portuguese workers enjoy conditions similar to those of workers who are nationals of Community Member States with regard to working conditions, pay and social security. The financial protocol covers aid worth 200 million u.a. in the form of EIB loans spread over a period of five years. 150 million U.a. (the maximum charge) are